Commerce Resources with President Chris Grove

00:00:09 Commerce Resources is the first company that was created by Zim 2 Capital as an IPO in August of 2001. I was a shareholder in the seed financing round in 1999 at $0.20 and it IPO'd at $0.040. It went to 45 and then 9/11 happened. At any rate I started working for the company in 2004. 10 year later, Dave threw me the keys to be President of Commerce Resources. It's a pleasure speaking to you today.

00:00:40 Now Commerce Resources has two projects. We originally took the company public on our tantalum project in British Columbia. It's this project in Quebec that I would like to speak about today. The world is changing. The world is changing in incremental macro ways. Then there are other changes that are black swan events. This being one of them.

00:01:02 Yes, Donald J. Trump and $350 billion arms deal with Saudi Arabia. Just one of the many arms deals that the U.S. will sign over the next while probably totaling somewhere around $2 trillion.

00:01:16 At the end of the day, this something that just happened. This speaks to the current opportunity. In terms of whose benefiting from this arms deal, let's go to these American companies, Lockheed, Raytheon and Boeing. All of their stocks went up on the news of these arms deal. These are all extremely sophisticated weapons and weapons systems.

00:01:39 Yes. M16's and tanks are involved in this. It's the sophisticated weapons systems that are the backbone and the money makers for the U.S. in this regard.

00:01:48 For example here where the rubber meets the road or where the wings meet the air, an F35 has 920 pound of Rare Earth Elements per plane. This is what is important. In terms of President Xi Jinping of China's new best friend that’s Donald Trump because what President Xi knows is that he has the United States absolutely over a barrel in terms of supplies of Rare Earth Elements.

00:02:19 In terms of this, this was tabled in Congress on March 7th. This is called the Hunter Bill or the METALS Act. This essentially or the language is set to introduce it in Congress seeks to address the fact that the United States is completely dependent upon foreign sources of Rare Earth Elements. Again, the trillions of dollars in weapons and weapons system that the United States is going to sell they need Rare Earth Elements. Where they get those rate elements from right now? From China.

00:02:49 In terms of the current producers of Rare Earth Elements that is dominated bureaus China, is China a proven ally of the United State? Questionable. In terms of other producers of Rare Earth Elements, there's Russia. They produce a very small amount of rate earth elements. Are they an ally of any one else in the U.S. besides Donald Trump? I don’t know. Not necessarily.

00:03:11 Malaysia is Linus. Linus have an odd process. Malaysia is certainly an ally of the United States. At the bottom of his chart, you can see Canada and the Ashram Rare Earth Project. Not only do we have conventional processing like China but we are a proven U.S. ally.

00:03:28 In terms of Rare Earth Element demands, Johnny, my electrician drives a Porsche was talking a lot about cooper, cobalt. Certainly Stefan Bogner just recently here was talking about lithium, cobalt, et cetera. Yes. Everyone understands that there is a huge up swing in lithium and cobalt demand. However, I doubt if there's another commodity that is increased by over 50 percent in usage and demand in the last seven years which Rare Earth Elements have.

00:03:56 It's gone from about 100,000 and 110,000 tons from 2010 to a 150 to 160,000 tons in 2017. That is a huge up swing in demand. You can see the projections here. In terms of these projections, where are they mainly coming from? It's mainly coming from electric vehicles. Look at the numbers here.

00:04:16 The numbers for 2017 are going to essentially go parabolic. We're looking forward to that. Rare Earth Elements are not necessarily important for the battery, the lithium ion battery. They are the metal in the nickel-metal hydrate battery.

00:04:32 However, everything that the lithium ion battery drives ends up being a motor, an electric motor that needs Rare Earth Element magnets. That’s where the rubber meets the road. In terms of prices, yes. Rare Earth Element prices have been falling for six years. That is a terrible, terrible downturn. The reality though is that at this point and time I would suggest that China believes it is hold all the cards and feels comfortable in goosing prices.

00:05:00 From January, you can see that these prices have started going up quite significantly. That is January there. That is January there. January is the turn around point. At this point and time with Molly Corp. having gone bankrupt two years ago, China is currently pushing up the prices. Commerce Resources does not necessarily need higher prices but that’s another key to our project and it's economics.

00:05:28 In terms of the Ashram Project were located in Northern Quebec. Glencore Raglan is about 500 miles to the north of us. In terms of the project, this is probably the most important slide of the deck in terms of understanding Rare Earth Elements and the complexities they present which is exponentially greater than any other commodity. If you were looking for a nickel deposit, you would rather have a massive sulfide like Voisey's Bay instead of a later right as you find say in the Philippines. The order of complexity for Rare Earth Elements is over 100 times greater.

00:06:05 There are a approximately 200 minerals that can host levels of Rare Earth Elements. Our of that, there are only four that are commercialized. Out of those four two of them would be 80 percent of the entire market and that is Monazite and Bastnasite. The Ashram Project is hosted by Monazite and Bastnasite.

00:06:25 In terms of what is important for the Rare Earth Element market, it is the magnet feed material. You can see our percentage of magnet feed which 24.7 percent whereas Molly Corps. Amount in past deposit just had over 16 percent. That means they have to mine. They have to process exponentially more material to get what the market actually wants which is again is the magnet feed material.

00:06:49 In terms of our deposit, we have a huge resources. We have added about 10,000 meters of drilling since this resource came out in 2012. The other addition that I would like to mention at this point and time is our fluoride byproduct down here on the side. In the zone that we will begin mining first, we have approximately 8 percent on average of fluorspar. I'll talk a bit more about that in a second.

00:07:14 This is just our mine to market scenario. Essentially we mine it. We put it on a road that is yet to build. However, in the area where we are looking for the government of Quebec to built infrastructure, five months ago OCISCO joint ventured with Berwick, the can project. Northern Shield is up there. Midland is up there. There is a ton mineral wealth up there. The government want to build a road essentially. Not a driveway to our property but to open up the entire area.

00:07:44 In terms of the improvements to our flow sheet from the PEA which was in 2012, I would draw your attention to the fact that the PEA was based upon a 10 percent mineral concentrate. We now produce concentrates in the 45 to 50 percent range. We also realized that for free, we produce a fluoride by product.

00:08:02 It is fluoride byproduct. I'm going to skip down. We're running out of time here.

00:08:06 There are also I would like to say technological innovations that arguably may make mining outside of China lower cost than the operations in China. China is facing rising labor costs. They are also at least pushing up prices because they say that environmental inspections are shutting down mines. That is true for rate earth elements and fluorspar.

00:08:30 In terms of one of unstoppable paradigm shifts in terms of clean and green and renewable energy, this is a photograph of the company we have an MOU with which is Toglick. Toglick setup the retro fitted Glencore Raglan Mine. This wind power will potentially save Glencore 40 percent of their diesel cost. We will be looking to use Toglick in the constitution phase as well.

00:08:56 In terms of investors among Quebec they put a $1 million into us in February. Our stock did a very nice jump after that fact. We're excited to have the support of Quebec financially and in all of the other ways that they will arguably bring to bare.

00:09:12 This is a picture of our pilot plant at Hazan Research. That's your truly in the red hat. I've got the important hat. Behind is one of the most experienced men in the world in Rare Earth Elements. He's like the Yoda of Rare Earth Elements. His name is Kazul Machida. He's a Japanese consultant to us. He's been trading Rare Earth Elements for over 45 years. Next to him is Nick Hazen.

00:09:33 I'll tell you a funny story about Nick and his introduction to Kaz if you want to come back to our both is 811 right at the front and certainly I'd be happy to answer any questions. It looks like I'm going to over time. The bottom line is that we've just closed another financing of a $1 million. The capital from Quebec and also from this recent financing will be used to finish our pilot plant and produce the samples for the company's that you see listed here and several that were under non-disclosure with.

00:10:02 In terms of one of those, we have an MOU with NorFalco Sales, the subsidiary of Glencore. They have agreed to give us a deep discount on acid for our project, hydrochloric and sulfuric in exchange for a future consideration on for fluorspar byproduct.

00:10:18 Fluorspar is used to make or fluorides is used as a flux for aluminum and steel smelting. Fluorine is the gas in the back of your refrigerator. The highest and best of fluorspar is to make hydrofluoric acid. The supply of fluorspar in Rare Earth Elements are very similar. They are both dominated by China and they're both seeing rising prices right now.

00:10:41 At the end of the day in summary, we have simple mineralogy standard processing works for us absolutely fine. In terms of the economics, we're looking to release in our pre-feasibility study. I am very excited about those considering the improvements that we have already achieved in the last five years. We have the support of Quebec through that million dollars in February.